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Brussels calculates that its new tax on extraordinary profits from energy companies will raise 140,000 million & More Latest News Here

 

What for the PP is typical of the “most bilious communism of the 20th century”, for the European Commission is the way to face an unprecedented energy crisis, aggravated by gas cuts by Russia as a reaction to the EU’s support for the invaded Ukraine. This Wednesday the president of the Community Executive, Ursula von der Leyen (German of the CDU, member of the European PP), has advanced some data of her proposals to face the harsh winter in the debate of the State of the Union, in the plenary session of the Parliament European in Strasbourg. According to Von der Leyen, the new European tax on extraordinary profits from energy companies will allow the collection of “140,000 million euros”.

“We are being put to the test”, said the president of the European Commission: “It is a war against our energy, our economy, values, our future. It is about autocracy against democracy, and I am convinced that with the necessary courage and solidarity, Putin will fail and Europe and Ukraine will win.”

The president of the European Commission herself has announced in plenary session that this Wednesday she will travel to kyiv to meet with the Ukrainian president, Volodímir Zelenski. It will be the second time that she has traveled to Ukraine since the beginning of the Russian invasion – the first was on April 8. Von der Leyen is scheduled to discuss with Zelensky the advances in the single European market for Ukraine, after announcing the extension of roaming to this country. In the stands is the president’s wife, Olena Zelenska, with whom she will travel from Strasbourg.

“In the month of March we managed to connect Ukraine to our electricity grid”, said Von der Leyen: “It was an initiative planned for 2024, but we carried it out in two weeks. And, at the moment, Ukraine exports electricity to us. I want to significantly expand this mutually beneficial trade. We have already suspended import duties that applied to Ukrainian exports to the EU. We will integrate Ukraine into our large European free roaming area. Our solidarity runners are being a great success. Building on all these achievements, the Commission will work together with Ukraine to ensure Ukraine’s unhindered access to the single market, and vice versa. Our single market is one of Europe’s great achievements. The time has come for it to be for our Ukrainian friends as well. For this reason, today I will travel to kyiv to discuss this issue in detail with President Zelensky”.

The President of the Commission had already traveled to the Ukrainian capital on April 8 along with the High Representative of the European Union for Foreign Affairs, Josep Borrell, when a month and a half had passed since the beginning of the invasion and the community bloc had just approved the fifth package of sanctions on Moscow to veto Russian coal purchases starting last August.

Now, almost seven months after the beginning of the aggression, the situation on the ground has evolved and it is the Ukrainian army that is leading the counteroffensive both in the east and in the south of the country.

The proposals approved in the college of commissioners in a context of record inflation data and shadows of recession while the ECB risks suffocating the economy with unprecedented rate hikes, consist, according to what has been circulating, of: that the EU countries reduce their average electricity consumption by 10% and that this saving is at least 5% in peak hours; limit the income of electricity companies, setting a ceiling in the electricity market of 180 euros per megawatt/hour for generation from renewable, nuclear and lignite sources –less than the 200 euros that circulated in drafts a week ago–; and to set a 33% rate on windfall profits from fossil fuel companies (oil, gas, coal, and the refinery sector), which are fattening up thanks to high gas prices.

Of course, the European Commission recognizes that it needs more time for two other measures for which the EU energy ministers have asked for guidance: putting a cap on the price of gas and increasing the liquidity of the financial markets for energy futures.

From here, a negotiation period opens with the 27 to reach an agreement at the extraordinary meeting of energy ministers convened for September 30 in Brussels.

“We have to end dependency”, said Von der Leyen in the European Parliament: “We are at 83% storage, but it is not enough. We must diversify, move away from Russia and look for more reliable partners, such as the US, Nigeria and Norway. Last year, the Russian gas that reached the EU accounted for 40%; today it has fallen to 9%. But Russia continues to manipulate our market, they prefer to burn the gas instead of fulfilling the contracts”.

According to Von der Leyen, “this market is not working. It has stopped working. In addition, the climate crisis has a price on our bills, the drought has affected hydroelectric plants and electricity is ten times more expensive. It is generating anxiety for millions of businesses and families. I want our Union to follow suit and reduce demand at peak times so that supply lasts longer. For this reason, Member States are presenting measures to reduce electricity consumption. Specific support is needed for SMEs, and for those who cannot pay their bills, which is why we propose a cap on benefits never imagined. At this time it is not right to receive benefits from the war and let consumers pay the price”.

“The benefits must be shared and channeled to those who need them most” said the President of the European Commission: “Our proposal will raise more than 140,000 million euros that will allow Member States to cushion the blow directly. And because we are in the midst of a fossil fuel crisis, the fossil fuel industry also has a special obligation. Big oil, gas and coal companies are also making huge profits. And for that they have to pay a fair share: they have to make a contribution against the crisis. These are all emergency and temporary measures that we are working on, including the price cap discussion. We need to continue working to reduce gas prices. We have to guarantee security of supply and, at the same time, our competitiveness on a global scale”.

Von der Leyen added: “As we face this urgent crisis, we must also look to the future. The current configuration of the electricity market, based on the order of merit, is no longer fair to consumers. These should take advantage of the benefits of low-cost renewable energy. Therefore, we have to decouple the dominant influence of gas on the price of electricity. For this, we will carry out a deep and comprehensive reform of the electricity market”.

“We want gas prices to remain low, guaranteeing energy prices and competition. But if it is too expensive, it damages our competitiveness,” says Von der Leyen, who has recognized that “the gas market has completely changed. There is more and more liquefied gas. But that market has not adapted, and we want to go to a more representative pattern to reflect those changes. And at the same time, energy companies are cash-strapped, so we are going to work with market regulators to limit day-to-day price volatility by amending the state aid framework in October. It is not easy, but they are the first steps.

New tax rules

The EU has had fiscal rules –debt and deficit– suspended since the start of the pandemic to give free rein to public spending. But it has also embarked on the process of reforming them, due to their complexity to be applied and their rigidity. In this context, the President of the European Commission has said: “We need budgetary rules that allow strategic investment and at the same time safeguard budgetary sustainability. In October we will present new ideas for our economic governance. Member States must have more flexibility in their debt reduction paths. However, there must be greater responsibility for the fulfillment of what has been agreed. Simpler rules should be established that everyone can follow. To open up space for strategic investment and give the financial markets the confidence they need. Stability and growth can only go hand in hand.”

“The PP normalizes the entry of the extreme right in the institutions”

The president of the European Socialists in the European Parliament, Iratxe García, stated: “The crises reveal our weaknesses, but also where we have to influence. Our commitment to the Ukrainian people is firm, but to ensure the support of citizens, we must put ourselves in the shoes of those who are suffering the consequences of the war. In the same way that we were loyal partners in the pandemic, we will be now to avoid a recession. We are late, but I am glad that what we were saying is already heard: to put a cap on the price of gas, and we can do that with a part of the extraordinary profits. I am concerned about the extreme right, we must act in defense of the rule of law. It saddens me to say it, but the state of democracy is as fragile as our economy. Overcome ghosts return, there are pro-fascist parties that can win elections. Mr Weber, I appeal to you to reconsider your role, the best patriotism is the European Union, not exclusionary nationalism. They are normalizing the entry of the extreme right in the institutions, I hope they rectify it because we have a shared responsibility”.

Brussels calculates that its new tax on extraordinary profits from energy companies will raise 140,000 million
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